Thursday, 29 September 2016

Trend Wizard Timing September 28, 2016

Divergences in the market place give clues as to what can happen going forward. The timing tool I use is based on market breadth. The charts below (except the S&P 500 charts) are market breadth charts which is the difference between the number of issues reaching new highs and the number of issues reaching new lows during a 4 week period.

Chart 1 and 2...... are 2 day cycle charts of the market breadth timing tool. You can see the 3 tops
Pivot point peak 1 - 3rd quarter 2014
Pivot point peak 2 - 2nd quarter 2015
Pivot point peak 3 - I got cross over to the downside on September 14th and 15th

Note how each high is lower than the previous high..... chart 1 and 2 are the same except chart 2 is zoomed out.

Note the S&P 500 pivot points in the cash market, each high is higher than the previous. When a divergence is spotted in the market, the 3rd time is pretty much the last. 

 This is the chart of the time tool in the medium time frame. There was a cross over but it's weak.

 The chart below is the short term. It's a fast chart and getting a whipsaw, however is still positive and trading the short term accordingly..... just in and out with small percentage of account.

Key take away from the above. When there's a divergence in the market I pay close attention. There's nothing more important than a divergence to get information from, it says that the market has lost the energy to keep on going. Can things change? YES, this could be just a consolidation with crossovers to the upside on the 2 day cycle chart. 

That would mean new highs in the S&P 500. If we do get new highs in the stock markets..... it's quite possible that this thing could go straight up to 2500 in no time flat, but we'll see. 

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